Superseding Indictment Charges 11 People in $19 Million Tax Fraud and Identity Theft Conspiracy

ANCHORAGE—U.S. Attorney Karen L. Loeffler and Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division announced that 11 defendants were charged in a 90-count superseding indictment returned today in connection with their alleged roles in a scheme to use stolen Puerto Rican identities to file tax returns and obtain fraudulent income tax refunds. This second superseding indictment adds tax fraud, identity theft, and other financial counts to previous charges, including conspiracy to distribute cocaine, cocaine distribution, and international money laundering.

“Today’s indictment is a clear warning that anyone who steals the identities of innocent taxpayers and uses the information for personal profit will be aggressively pursued, investigated, and prosecuted in Alaska or throughout the United States,” Ms. Loeffler said. “This case is an example of how interagency cooperation and teamwork can successfully bring down an entire organized criminal conspiracy.”

The indictment charges that between January 2010, and March 2012, the defendants engaged in a conspiracy to defraud the United States by filing false tax returns and claiming millions of dollars in tax refunds to which they were not entitled.

To accomplish their tax refund scheme, the indictment alleges that the conspirators obtained the names and Social Security numbers of individuals from the Commonwealth of Puerto Rico. They then fabricated individual income tax returns in those names claiming that they were owed thousands of dollars in refunds to which they were not entitled.

To facilitate the submission of false tax returns, the indictment alleges that three of the defendants obtained laptop computers that were loaded with individual names, Social Security numbers, and other identity information. Altogether, the three laptop computers contained over 2,600 stolen identities and identified approximately $19 million in fraudulent refund claims. The indictment further alleges that, in some cases, one or more of the defendants obtained the physical addresses used on the tax returns by stealing mail from mailboxes in and around the Anchorage area.

In other cases, it is alleged that one or more of the defendants contacted conspirators in locations such as New Jersey and Puerto Rico and requested that fraudulently obtained tax refund checks be sent to Anchorage under false names.

The indictment also alleges that the defendants negotiated the refund checks at banks in Anchorage. The indictment further charges one bank employee with assisting other defendants in opening bank accounts in false names and negotiating forged U.S. Treasury checks.

In order to negotiate the tax refund checks, the defendants allegedly used false identification documents. They allegedly obtained these documents by using the names, dates of birth, and Social Security numbers of other individuals in applications made to the Alaska Department of Motor Vehicles. The defendants are charged with opening numerous bank accounts in the various stolen identities. The defendants involved in the tax scheme, all of whom were citizens of either the Dominican Republic or Mexico, are alleged to have falsely claimed to be United States citizens on their applications for these false documents.

The indictment also charges various defendants with submitting false claims for refund, possessing stolen mail, making false claims of U.S. citizenship, committing passport fraud, making false statements to banks and credit unions, and passing forged U.S. Treasury checks, as well as aggravated identity theft. The fraud charges each carry maximum penalties of between two and 30 years of imprisonment, in addition to the five-year mandatory minimum prison term required upon conviction on the drug charges.

“The charges brought forth today against these 11 individuals serve as another reminder that IRS-Criminal Investigation is aggressively pursuing those who choose to defraud the government and disrupt the lives of innocent taxpayers,” stated Richard Weber, Chief, IRS-Criminal Investigation.

“These criminals illegally posed as U.S. citizens and exploited our financial system for personal gain,” said Brad Bench, Special Agent in Charge of HSI Seattle, who oversees investigations in Alaska. “By pooling our unique resources, legal authorities, and expertise, HSI and the IRS were able to dismantle a significant scheme to defraud the people of the United States.”

“Drug traffickers’ greed clearly has no limits, as evidenced by this investigation,” said Acting Special Agent in Charge Douglas James of the Drug Enforcement Administration. “The DEA is proud of its partnership with the Anchorage Police Department, who brought this case to their federal counterparts, exposing this multi-faceted criminal organization.”

The case is being jointly prosecuted by Assistant U.S. Attorneys Thomas C. Bradley and James Barkeley of the U.S. Attorney’s Office for the District of Alaska and Trial Attorney Stephanie Carowan Courter of the U.S. Department of Justice Tax Division. The initial charges arose out of an investigation begun by the Drug Enforcement Administration (DEA) and Anchorage Police Department (APD). The new charges were further investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the U.S. Postal Inspection Service (USPIS), and the U.S. State Department’s Diplomatic Security Service. Additional assistance was provided by the U.S. Attorney’s Offices for the District of New Jersey, the Eastern District of Pennsylvania, and the Southern District of New York.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites, including the Federal Trade Commission, Justice Department, Social Security Administration, and IRS.

This case was investigated and prosecuted under the purview of the Organized Crime and Drug Enforcement Task Force, which is made up of personnel from the U.S. Attorney’s Office; Federal Bureau of Investigation; Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; ICE-Homeland Security Investigations; Internal Revenue Service–Criminal Investigations; U.S. Marshals Service; U.S. Postal Inspection Service; U.S. Coast Guard; and the Anchorage Police Department.

An indictment is merely a formal accusation. Defendants are presumed innocent until proven guilty in a court of law.